Can coffee king Keurig caffeinate soup sales?

BY Maria Lamagna...

Of all the features consumers want in a coffee machine, the ability to make soup probably isn't high on the list. So even though coffee and soup are both hot liquids served in a cup, news this week that soup giant Campbell's was joining up with single-cup brewing king Keurig seemed odd.

But given the growing presence of Green Mountain Coffee's Keurig machines in homes, offices, and car dealerships, and rosy forecasts for U.S. soup sales, analysts say this joint effort could be the next hot thing in hot things.

Single-serve coffee sales have grown from 23 percent of all ground coffee sales to 33 percent in the 14-month period ending June 8, according to research from Nielsen. And though Campbell's earnings were $458 million in 2013, down from $774 in 2012, its soup category is performing well, with sales rising 4 percent in the company's fiscal 2013 fourth quarter, compared with the same period the year before. During that stretch, sales of ready-to-serve soups increased 9 percent.

But soup sales aren't only Mmm Mmm good at Campbell's. Total soup sales in the U.S. amounted to $5.9 billion in the year ending in June 2013, according to Nielsen data, up from $5.7 billion the year before. Dry soup mixes and bases (what the new Campbell's-Keurig concoction will be) amounted to nearly $970 million for that period, up from nearly $954 million the year before.

The Keurig coffee machine has wide appeal across multiple demographics, says Brian Todd, the president and CEO of The Food Institute, based in N.J.

Keurig's K-cups — single-serving plastic containers with coffee filters inside — have become popular not only in households, but in small offices, locations with waiting rooms like doctors' offices, and with college students. They've also expanded from coffee to tea and cocoa, and soup may be a logical extension.

Previously the company had partnered with Starbucks and Dunkin' Donuts for coffee K-cups. Now, Campbell's can promote its brand similarly, says Joe Pawlak, the vice president of Technomic, a food industry research and consulting firm.

"It makes a lot of sense, as a good way to get some buzz," he said. And buzz about soup can be hard to come by, Todd said. "Soup is not one of the most dynamic categories out there, so when something new happens it garners a lot more attention," he said. Campbell's has launched microwavable soups, both of the Chunky and "on the go" varieties, but overall the category isn't particularly innovative, the experts said.

Campbell's says part of the impetus for the new product is an increase in American snacking. More than half of U.S. consumers snack multiple times a day, the company said, citing research from The NPD Group.

"We're seeing Americans have more meals, smaller meals and more snacking occasions, so that kind of fits that overall trend," Pawlak said.

Still, the Keurig-Campbell's partnership probably won't make any huge waves, Pawlak said. Although it is a way for both companies to expand their offerings, it shouldn't amount to huge revenues for either.

"At the end of the day, it's not going to change their business that much," he said.

The companies said they will launch the new product in 2014 in three flavors, including Homestyle Chicken Broth & Noodle. They will be sold in the same aisles and retail sections where Keurig's K-Cups are sold.